In Year 2, a manufacturing company instituted a total quality management (TQM) program producing the following report:

On the basis of this report, which one of the following statements is most likely true?

A. An increase in prevention and appraisal costs resulted in a higher quality product and therefore resulted in a decrease in failure costs.

B. An increase in inspection costs was solely responsible for the decrease in quality costs.
C. Quality costs, such as scrap and rework, decreased by 48%.
D. Quality costs, such as returns and repairs under warranty, decreased by 40%.

Answer (A) is correct. Prevention and appraisal costs increased substantially, but internal and external failure costs decreased. Thus, the soundest conclusion is that the increase in prevention and appraisal costs resulted in a higher-quality product.